Gulf Coast battens its hatches

Hurricane Ivan packing 160-mph winds as it nears U.S.

By

CBSMarketWatch

DALLAS (CBS.MW) -- From Big Oil to Big Agriculture, businesses fearing billions in losses scrambled to protect themselves Wednesday as Hurricane Ivan stormed into the Gulf of Mexico and took deadly aim at the U.S. Gulf Coast.

New Orleans and other cities along a 300-mile stretch of coastline turned into ghost towns Tuesday as businesses closed and millions of residents fled the killer hurricane.

Ivan was expected to hit land late Wednesday or early Thursday, somewhere between Florida's Panhandle and Louisiana, packing 160-mph winds, torrential rains and huge ocean storm surges. By late Tuesday night, Ivan had been elevated to a Category 5 hurricane, the most dangerous.

Major petroleum companies were closing Gulf pumping facilities and onshore refineries well in advance of the slowly moving hurricane, which already has claimed at least 68 lives and caused billions in damage in its rampage through the Caribbean.

Across the heart of the United States' oil-refining region, major multinationals and smaller independents were closing facilities or going on storm-alert status.

ChevronTexaco
CVX, +0.07%
said its facility in Pascagoula, Miss., which processes 325,000 barrels of crude oil daily, would be closed by Wednesday morning. Pascagoula, which took a $50 million beating in 1998 from Hurricane George, is ChevronTexaco's biggest U.S. refinery.

ExxonMobil
XOM, +0.92%
began shutting down its refinery in Chalmette, La., a spokeswoman said. The facility processes 92,000 barrels of heavy crude from Venezuela daily.

The other oil majors, including BP
BP, +0.53%,
ConocoPhillips
COP, +1.76%,
Shell
RDSC, -0.65%
and Valero
VLO, +2.19%,
were moving to hurricane emergency procedures at their refineries in Louisiana, Mississippi and Texas' Gulf Coast as were smaller companies with operations there.

The U.S. Minerals Management Service said that 382 manned platforms, or 50 percent of the total in the Gulf of Mexico, have been evacuated. Some 60 rigs also have been idled.

Operators have shut down more than 61 percent of the 1.7 million barrels per day of Gulf oil production, as well as 34.1 percent of the 12.3 billion cubic feet per day of natural gas produced.

Shell pulled workers from platforms across the Gulf, which will lead to a production loss of 444,800 barrels a day, according to a Bloomberg News report. Royal Dutch shares fell 7 cents to $51.68, while Shell slipped 7 cents to $44.90.

BP has evacuated 83 percent of its Gulf region employees as it has slowed production, Bloomberg reported. Anadarko Petroleum
APC, -3.23%,
too, has pulled non-essential workers off the job in the region, the news agency added.

Louisiana, Texas, Alabama and Mississippi -- all possibly in Ivan's path -- account for 46 percent of U.S. crude oil distillation capacity, according to the U.S. Energy Information Administration.

Texas and Louisiana rank 1-2 in U.S. oil refining. Texas' 25 operating refineries, many of them located near the Gulf, process 4.47 million barrels daily, while Louisiana's 17 refineries, the majority near the Gulf or Mississippi River, process 2.75 million barrels daily. Those two states alone account for 43 percent of U.S. capacity, according to the EIA.

Moreover, about one-quarter of all U.S. oil and natural gas production is concentrated in the waters off Texas, Louisiana, Mississippi and Alabama.

Port of New Orleans closes, Mississippi shipping halts

Hurricane Ivan could cost New Orleans $19 million a day as cargo ships are turned away, said Gary LaGrange, CEO of the Port of New Orleans. All shipping on the lower Mississippi River was halted Tuesday.

The busy port was closed Tuesday morning because of the approaching storm.

"And that's for the first week to 10 days," said LaGrange, whose port accepts shipments of steel, plywood, rubber and coffee. "But that's a number that increases exponentially as time goes by."

With the port closed, some ships are being diverted west, LaGrange said, to the Texas ports at Houston, Galveston and Freeport. Others have reversed their course to avoid the storm.

Marriott Hotels
MAR, +1.12%
reports on its Web site that four hotels in Florida and two in Alabama have been asked to evacuate. The company said the hotels will remain closed until local authorities advise they can re-open.

According to the Pensacola Regional Airport Internet site, airlines operating out of the airport are suspending services as Ivan approaches. Military bases in the region also have closed.

Delta Air Lines
DAL, +0.96%
suspended flights from the airport after its last flight on Tuesday Sept. 14. The airport said Northwest's
NWAC
last flight was Tuesday and U.S. Airways'
UAIR
last flight will be Wednesday morning.

AirTran
AAI, +0.00%
said it has suspended service on Wednesday at airports in Pensacola, Gulfport/Biloxi, Miss., and New Orleans.

And according to media reports, Mississippi closed its 12 coastal casinos.

Alabama, Louisiana and Mississippi all ordered evacuations from coastal areas, as did Florida in four Panhandle counties.

The military closed Pensacola Naval Air Station, evacuated Eglin Air Force Base and removed all but essential crews from Hurlburt Field, according to media reports. In Pascagoula, Miss., Northrop Grumman Ship Systems
NOC, -0.42%,
a major builder for the Navy and for commercial carriers, shut down operations, idling 12,000 workers.

$7.6 billion in crops vulnerable to Ivan

Some $7.6 billion in crops, including nearly all the nation's peanut crop and half the cotton crop, stand in the fields as Ivan approaches, the Wall Street Journal reported Wednesday in its online edition.

Much of the area along Ivan's projected path is recovering from Hurricane Frances, which halted farm work, the Journal said.

According to the Journal, only 5 percent of the peanuts in Georgia, where 45 percent of the U.S. crop is grown, has been harvested, while half the nation's cotton crop, valued at $2.6 billion, remained in the fields in the Southeast as of Sunday, the Journal said, citing figures from the U.S. Department of Agriculture.

The Journal said Ivan-caused damage to agriculture could stretch as far inland as the Ohio River Valley, some 600 miles north of the hurricane's projected landfall.

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